Brazil Judge Notes Enormous Cost of ‘Systemic Corruption’

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The judge handling the biggest political graft case in Brazil’s history says “systemic corruption” has generated “enormous” costs for the country, adding that institutional factors have complicated efforts to address the issue.

Sergio Moro, the federal judge in charge of the massive anti-corruption case dubbed “Operation Car Wash” (Operação Lava Jato), made the comments during a July 14 presentation at the Woodrow Wilson Center in Washington, DC.

The judge has jailed a number of powerful political and business figures as a result of the “Car Wash” investigations, which revealed that executives at the state-run oil corporation Petrobras had issued inflated public works contracts to companies in exchange for bribes and kickbacks, some of which were laundered and funneled into political campaigns.

“It seems that payment of bribes on Petrobras contracts was not an exception, but rather the rule,” Moro said, noting that some participants in the scheme described bribery as “a rule of the game” when it comes to the awarding of public sector contracts in Brazil.

“Corruption as an isolated crime exists all around the world. But systemic corruption — the payment of bribes as a rule of the game — isn’t really that common, and it represents a severe degeneration of public and private customs,” the judge continued.

Moro called the cost of systemic corruption in Brazil “enormous,” pointing out that bribery illegitimately inflates the costs of public works contracts and siphons funds from public coffers for the illicit enrichment of corrupt actors.

He also noted that corruption can result in poor investment decisions by public and private entities. To illustrate his point, he mentioned the role bribery played in the huge overpayment by Petrobras for the purchase of an aging oil refinery in Pasadena, Texas.

Moreover, Moro said, systemic corruption can discourage legitimate investment and can negatively impact confidence in democratic institutions and the rule of law.

The judge also spoke about some of the challenges posed by the Brazilian judicial system when it comes to prosecuting large-scale corruption cases like those stemming from the “Car Wash” investigations.

“As a general rule,” Moro said, the system “does not work very well in complex cases, especially in white collar crimes including bribery and money laundering.”

He cited the “slowness of the whole judicial process” as a factor that hampers efforts to bring defendants to justice in corruption cases.

Until just a few months ago, the Brazilian legal system allowed defendants who were convicted of crimes to stay out of jail while appealing their convictions. In practice, Moro said, this meant that wealthy and powerful suspects often avoided jail indefinitely by dragging out the appeal process.

The judge also said that Brazil’s justice system does not provide for “prosecutorial discretion” that would allow prosecutors to not pursue certain cases, which results in courts burdened by heavy caseloads that slow the process even further.

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In addition to describing the challenges associated with his work on the “Car Wash” case, Moro responded to some of the criticisms he has faced.

Some observers have raised concerns that the “Car Wash” investigation has relied too heavily on evidence derived from plea bargains, in which defendants admit their guilt and provide information about other suspects in exchange for legal benefits.

“The truth is that these cases involved the use of several other investigation methods,” Moro said, highlighting the role of financial records in confirming information obtained through plea bargains.

Moro also defended his decision to publicly disclose the content of wiretapped phone conversations between former Brazilian president Luiz Inácio “Lula” da Silva and his successor, Dilma Rousseff, who was suspended from office in May after the senate voted to begin an impeachment trail unrelated to the “Car Wash” case.

“It’s important to prevent any kind of justice obstruction,” Moro said of his decision to release the recordings. “Our federal constitution says that the case should be tried in public, in an open court, so we are just following the constitution.”

Critics of Moro’s decision have argued that the wiretaps were carried out without proper authorization and that their release constituted a violation of the ex-presidents’ due process rights. 

Others have suggested that the judge’s release of the conversations was motivated by a desire to damage the reputation of Brazil’s Workers’ Party, to which both Rousseff and Lula belong.

Moro, however, denied that his actions in the “Car Wash” case have been motivated by political concerns.

“That’s not right,” he said. “Of course, if the crime involves bribes paid to politicians, the case will inevitably have political consequences. But this happens outside the court, and the judge doesn’t have control of it.”

Although Rousseff and Lula have both been investigated in connection with the “Car Wash” case, neither has been formally charged with a crime related to the scheme.

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Moro stressed that while it is important for the judicial system to be strong enough to investigate and prosecute corruption when it occurs, ending Brazil’s “systemic corruption” will require actions by congress and the executive branch to change “rules of the game” that facilitate graft.

“The adequate functioning of the criminal justice system is a necessary, though not a sufficient condition to eliminate systemic corruption,” he said. “Systemic corruption is not and cannot be a problem only for the judiciary branch.”

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However, the judge also pointed out that enacting such reforms will likely prove difficult, as so many elites benefit from corrupt practices and therefore have little incentive to change the system.

At the same time, Moro said the achievements of Lava Jato case show that “much can be done even under the current system, as long as the problem is confronted and treated with seriousness.”

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